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Stats Say Indian Exports Rising; But Trade Ban Grabs Headlines

India continued to improve upon its exporting activity of late with a double-digit gain in activity in January. However, India’s trade deficit also demonstrated it has a long way to go, all while shutting down trade in one key product area for the second time since Spring 2010.

Recently unveiled statistics indicate India’s export activity grew by 10.1% in January, triple the percentage rate of just two months ago. While a marked improvement, the exporting activity still remains well below the pacing found during the middle and late portions of the year, typically. And, despites its status as one of the top four emerging economic powerhouses, it still runs on near $15 billion trade deficit. Some would categorize India as a land of contradiction despite signs of massive potential. But the European Union debt crisis and, to a lesser extent, U.S. consumer tentativeness have left gaps in demand for Indian-based outfits.

But the big headline coming out of India from a trade perspective this week is the nation’s ban of cotton and like fiber exports. Textile manufacturers based in India have been begging for assistance as the commodities market activity has caused pricing problems for its domestic business. Part of that is the massive consumption of cotton from buyers based in China. India’s last ban on cotton exports in April 2010 caused a pricing surge and, while it’s too early to safely predict the mid-term and long-term impacts of the ban, plenty of that trademark volatility in the commodity’s trading activity was on full display in the hours after the announcement.

(Note: India will be front-and-center at two FCIB educational opportunities this spring. It will be featured during the “Doing Business in the BRICs” session of the 2012 International Credit Executives [I.C.E.] Conference in Chicago May 2-4 as well as in the two-day webinar, “Doing Business in India,” starting April 24. For more information or to register, visit www.fcibglobal.com).

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